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Your Take: Do You Trust the Stock Market?

Last week, I wrote about how few “retail investors,” that’s folks like you and me, have come back to investing in the stock market [3] after the craziness of the Great Recession. The market has made significant gains, erasing the losses of the Great Recession, but many investors are still on the sidelines.

Then came word that the Japanese stock market, the NIKKEI 225, dropped 7.32% on Thursday [4] (Wednesday night for us in the United States). It was the worst percentage decline since the earthquake and tsunami in March 2011. The fall continued into the FTSE 100 (London index), which shed 2.1%, but given better than expected numbers here in the U.S., the drop didn’t translate to anything significant here. For the year, all of the stock markets have been going gangbusters. The NIKKEI was up 50% year to date before the fall but no one (meaning retail investors) saw it coming, which adds to this feeling of loss of control.

On Wednesday, a perfectly happy U.S. stock market was up until Bernanke started talking and it ended up down for the day. The market was down to open Thursday but eventually made its way pretty close to even. For someone like myself with a time horizon of decades, these gyrations are kind of scary but with thirty years to go, they’re not that scary. But there is a feeling that I have no control over it. It makes me wonder if I can trust the stock market. I know people are telling me that investing is the path to wealth… but is it?

7% single day drops, even if it’s the NIKKEI, doesn’t give me much confidence that I can trust the stock market. Any stock market.

How do you feel about the market? Trust it? Don’t care?

(photo: credit [5])